Tesla’s battery demand boom lifts supplier Tanaka in Japan

While a relatively small investment, the new money flowing into battery components from Tanaka could be a precursor to even more spending from suppliers.Bloomberg | August 31, 2017, 08:12 IST

As Elon Musk pushes out from his California base to make electric vehicles ubiquitous, a company halfway around the world and deep in the depths of the battery supply chain is riding his wake.

Tanaka Chemical, which has a long history in developing battery materials, says it’s boosting output to meet surging demand for its materials for making cathodes. The Fukui, Japan-based company, which has slightly more than 180 employees, plans to invest 500 million yen ($4.56 million) to boost output capacity by about 1,000 tonnes a year.

While a relatively small investment, the new money flowing into battery components from Tanaka could be a precursor to even more spending from suppliers anticipating new electric car models on the road in the next three years, Mamoru Shimakawa, an executive officer at Tanaka, said in an interview.

"Supply is exceeding demand right now as many cathode material makers had invested to boost capacity around 2008," Shimakawa said.

"The industry will need more capital investment. We will keep considering capital investments in line with our business prospects." Tanaka Chemical is representative of a group of Japanese companies whose fortunes have been lifted by the prospects for electronic vehicles.